Democratic tax bill clears panel, Lamont opposes package

April 22, 2021 GMT

The Connecticut General Assembly’s finance committee on Thursday advanced a long list of tax proposals from the majority Democrats that could end up in a final budget agreement, including a new “consumption tax” and capital gains tax on higher income taxpayers and a new child tax credit for qualified families.

But Democratic Gov. Ned Lamont voiced his opposition to the plan before a single vote was cast, expressing concern that it could risk the state’s recent financial successes as it emerges economically from the pandemic.

“We’ve got jobs that are being created. We’ve got companies coming to the state of Connecticut. I don’t want to do anything to stop that momentum,” Lamont said during a news conference about using federal coronavirus relief funds to boost the state’s workforce development programs. He reiterated that he’s “not open to a big tax increase, not right now.”


The comments from Lamont, considered to be a more fiscally conservative Democrat, were were echoed by some of his fellow Democrats, as well as Republicans who sit on the Finance Revenue and Bonding Committee. They highlight what could become challenging state budget talks in the coming weeks, as the June 9 adjournment looms, and the governor and state legislators try to reach a final agreement on a new two-year tax and spending package.

While Democrats control the General Assembly, members of the politically progressive wing of the party have been pushing for higher taxes on wealthier residents to address many of the inequities revealed during the pandemic, as well as the massive economic fallout for many residents who continue to suffer.

Rep. Sean Scanlon, D-Guilford, co-chair of the Finance Revenue and Bonding Committee, said the committee leaders worked to hard to balance the competing interests.

“We tried to craft a package that both met the moment in terms of the needs that we see out there, that we hear about in our hearings, that we know in our districts and from the people that we represent, but also does not stifle the growth that Connecticut is experiencing right now, the good news we’re experiencing,” he said.

Last month, Moody’s Investor Services upgraded the state’s general obligation bond rating one notch, marking the first credit rating upgrade in two decades. Moody’s cited the state’s “significant budgetary reserves and good financial performance through the pandemic.” The state’s budget reserve fund is estimated to end the year with $3.7 billion.

Some Republicans said while they supported some parts of the wide-ranging package, they expressed dismay with the overall bill, predicting it will raise taxes by $3.2 billion over three years and reverse many of the budgetary reforms enacted four years ago in a bipartisan state budget that was passed.


“It’s like we forgot everything that we’ve done or promised to turn our state around and, in fact, are doubling down on bad practices,” said Rep. Laura Devlin, R-Fairfield.

Thursday’s 26-22 vote in the Finance Revenue and Bonding Committee on the bill comes one day after the Appropriations Committee passed a two-year $46 billion Democratic spending plan along party lines. Unlike the vote on the spending bill, four Democrats joined the GOP in opposing the tax legislation. The panel on Thursday also advanced a bill that would establish a state health insurance option, another proposal Lamont does not currently support.

Some other highlights of the tax bill include the following:

— Increases the state earned incomed tax credit from 23% to 40% of the federal credit, ultimately to be funded through revenue from the yet-to-be approved legalized recreational cannabis program.

— Exempts breastfeeding supplies from the 6.35% state sales and use tax.

— Imposes a highway use tax beginning Jan. 1, 2023 on generally tractor trailer trucks that ranges from $0.025 to $0.175 per mile, depending on the gross weight.

— Imposes a new “consumption tax” and a new 2% surcharge on capital gains for taxpayers with higher federal adjusted gross incomes, beginning at $500,000 for single filers.

— Imposes a new gross revenue tax on digital advertising services.

— Establishes a new $600 per child tax credit against the personal income tax for residents with qualifying incomes.

— Makes permanent a 10% surcharge on the state’s corporate business tax, while eliminates a 6% tax on ambulatory surgical centers on gross receipts and imposes the state’s 6.35% sales tax on services instead.

— Allows restaurants, hotels and bars to keep 13.6% of the revenue generated from the 7.35% sales tax they collect on meals and beverages during fiscal year 2022.


Associated Press Writer Pat Eaton-Robb contributed to this report.